AG49-C Updates: What Advisors Need to Know Now in 2026

As of April 1, 2026, all carriers must update indexed universal life illustrations to comply with AG49-C changes. For advisors, that means some illustration reports may start looking different — especially when it comes to hypothetical historical index account returns.

So what exactly is changing?

AG49-C was updated to standardize how indexed universal life policies display hypothetical historical index account returns. Under the revised rules, an index must have at least 10 years of actual market history after its inception date before hypothetical historical performance can appear in an illustration. If it does not meet that threshold, those historical examples can no longer be shown.

Another key change is how averages are presented. Instead of showing multiple historical averages such as 5-year, 10-year, and 15-year returns, illustrations will now show a single average annualized return based on either the full index history or 25 years, whichever is shorter.

Why does this matter?

Regulators made this change to limit the use of synthetically back tested data in illustrations. In particular, they found cases where hypothetical historical indexed account returns exceeded the maximum illustrated rate, especially among newer proprietary indexes and managed volatility indexes.

That means newer indexes may appear less compelling on paper, not because the strategy changed, but because the rules around what can be shown have changed.

That distinction is critical. What AG49-C actually does is prevent these engineered indexed with no history from showing a high rate of return that has not actually happened and is just projected. As you can imagine it is very easy to design an index that performs well when you have the benefit of hindsight. 

What has not changed:

AG49-C does not change:

• the product design
• the available indexed accounts
• the crediting mechanics
• the maximum illustrated rate
• the general ledger values
• how the policy works

In other words, this is not a product change. It is an illustration compliance update.

How advisors should talk about it
This is a good time to reset expectations with clients and prospects. If a policy illustration looks different than it did a few weeks ago, that does not mean the strategy became less effective overnight. It means the illustration now follows a more restrictive standard for displaying hypothetical historical returns.

Advisors can frame the update this way:

• Industry rules changed what can be shown in an illustration.
• The policy’s mechanics and indexed account options have not changed.
• Historical illustration examples may be reduced for indexes without enough real-world history.
• The conversation should stay focused on policy design, objectives, guarantees, and the role of life insurance in the broader plan.

For advisors using IUL in retirement income, tax diversification, or executive benefit planning, the takeaway is simple: be prepared to explain why the illustration changed, and bring the conversation back to fundamentals.

Bottom Line

This is great for our industry and IULs because it limits some of the unrealistic expectations that are drawn from the volatility control indexes and engineered indexes. Many carriers have indexes that back test FANTASIC then end up under performing and disappointing clients and advisors. This prevents the over selling and under delivering of those indexes.